Minnesota has itself a new tax cut bill. But what does that mean to 2013 filers? The Minnesota Department of Revenue sorted out many of the details during a Monday press conference.
On Friday, Gov. Mark Dayton signed a $508 million bill which returns some of the state's tax surplus to Minnesotans. In a statement, Dayton says the tax cuts will put "more money in the pockets of Minnesota families and businesses" and "make taxes simpler for Minnesotans," according to KARE 11.
According to the governor’s website, by conforming Minnesota’s tax code to the federal government's, the bill will simplify taxes and provide tax cuts to middle-income earners in the state. Officials believe one in 10 Minnesota taxpayers will benefit from these new tax cuts, and the number is expected to grow for 2014.
How will it affect you? Officials suggest checking to see if you meet the qualifications (see below, or click here) for tax cuts this year.
Officials say if you’re one of the 1 million taxpayers who haven’t filed, but do qualify for the new tax cuts, wait until April 3 to file your taxes. The Department of Revenue's goal is to have the new forms and instructions available by then. If a taxpayer files before then, there could be a delay in their tax credits.
If you've already filed, not to worry. The Minnesota Department of Revenue will review each tax return and determine whether adjustments and refunds can be made automatically. If they can't, the department will contact any taxpayer who will need to file a paper amended return to receive new tax benefits. The disadvantage there is that paper amendments can create a delay up to six months for taxpayers to receive their tax credits, officials said in the press conference Monday.
If you don't qualify for any of the new tax breaks, taxpayers can file normally.
Here’s a look at the general guidelines for the 10 qualifications that could earn taxpayers deductions. If these guidelines apply, officials urge taxpayers to see updated forms and instructions, which should be available by April 3, for specific filing information.
– You have one or more children. If you are married and filing a joint tax return and your modified adjusted gross income is $25,000 to $45,000, you can qualify for the Working Family Credit. The average savings is $334. The credit is refundable (you can receive it even if you do not owe taxes for the year).
– You own a home with a mortgage. If you paid mortgage insurance premiums as part of your loan payments and your modified adjusted gross income is below $110,000. You may be able to deduct the premiums.
– You used to own a home with a mortgage. If your lender agreed to accept less than you owed in a “short sale” or a foreclosure of your home, then you can exclude the the amount of debt forgiven by the lender from your Minnesota income.
– You are a K-12 school teacher or school employee. If you bought classroom supplies or materials with your own money, you can deduct up to $250 of your purchases.
– You paid tuition and fees. If you, your spouse, or a dependent attended any college or post-secondary school and your modified adjusted gross income is below $80,000 for individual filers or $160,000 for joint filers you may be able to deduct up to $4,000 of the tuition and fees.
– You had a student loan. If you paid interest that could be deducted on your federal tax return and your modified adjusted gross income is below $75,000 for individual filers or $155,000 for joint filers, you may be able to deduct up to $2,500 of the interest.
– You have a child in grades K-12. If you used distributions from Coverdell Education Savings account to pay for their education, then you can exclude those distributions from your Minnesota income.
– If you received a National Health Service Corps Scholarship program or F. Edward Hebert Armed Forced Health Professions Scholarship and Financial Assistance program. If your benefits were excluded from federal income in 2013, you can exclude the value of the scholarship from your Minnesota income.
– If your employer either helped pay for college or post-secondary training, helped pay for adoption expenses, or provided you transit passes or van pooling benefits. If these apply to you, you can exclude a certain amount of the benefits on your Minnesota income. Read more here.
– If you are 70.5 years or older. If you made contribution to a qualified charitable organization directly from your IRA you can exclude up to $100,000 of your IRA distributions from your Minnesota income.
Other things to take into consideration for the 2013 tax filings:
– Direct deposit: If a taxpayer filed 2013 taxes using direct deposit, any refund will be deposited with the adjusted tax breaks when possible. If not, taxpayers will receive a paper check in the mail as requested and a letter detailing the changes.
– Tax filing programs: Officials are discussing the new tax cuts with vendors of tax filing programs and companies this week. Companies hope to have the updated information ready by April 3. If the companies don't, taxpayers won't be able to use that software. The Department of Revenue will list the available tax programs on its website.
– Taxes are due April 15. The deadline for 2013 taxes is still April 15, unless a taxpayer has filed for an extension with the IRS.
– Business tax cuts. The Department of Revenue will hold another press conference on Thursday to provide updates on the tax cuts, including new information on the business sales taxes and gift taxes that are going into effect.